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Reinsurance broker Willis Re in a preview of the January policy renewals season said that eurozone sovereign debt crisis could trigger a strong rise in reinsurance premiums by draining the industry of a persistent capital surplus that has fuelled intense, price-sapping competition.

The key to a sustained market hardening is much more likely to lie in the impact of the current economic turmoil in the euro zone and elsewhere, and how this works through to diminish the capital bases of reinsurers," according to Willis Re.

With reinsurers holding plentiful capital despite near-record natural disaster claims last year, price rises this month will likely be confined to catastrophe cover, and "it is unclear if a sustained market hardening will be seen," the broker said.

Natural disasters including the March 11 Japanese earthquake pushed total catastrophe claims in 2011 to $108 billion, making it the insurance industry's second-costliest catastrophe year after 2005, when Hurricane Katrina devastated New Orleans, according to reinsurer Swiss Re.

Analysts have said the concentration of last year's catastrophes in the Asia-Pacific region has spared heavyweight European and U.S. insurers from their full capital impact, limiting the knock-on effect on pricing.

The industry has also been able to top up its reserves thanks to new flexible capital instruments which allow insurers to raise funds from outside investors cheaply and quickly.

Increases in reinsurance prices have historically been driven by capital shortages, typically triggered by major catastrophe losses, which force less well-financed players to retrench and free others to charge more.

Separately, analysts at Espirito Santo bank in London said they expected catastrophe reinsurance prices to rise by between 5 and 10 percent at the January renewals, with the rest of the market remaining flat.